Biblical Principles of Investing
Written by Dan Handford
Vice-Chair and Secretary | Fortify Foundation
I was sitting in church one Sunday morning and admittedly my mind started to wander off (please don’t hold it against me!). I was thinking about a conversation that I had with a fellow church member a few months prior. At the time, we were discussing how we would love to start paying our schoolteachers more with the consideration of the current rather low tuition rates. We debated how much you would need to increase the tuition to close the gap from the difference in private vs public sector teacher salary rates. It seemed rather high, but the one issue was that if you raise tuition too high then you might lose a large percentage of your student body. Of course, we don’t want that to happen. While my mind was wandering during this Sunday morning service, I had this thought about how we could combine my knowledge and expertise in investing into making a substantial impact for Christ by solving the problem of raising tuition. As the Lord has allowed me to serve in business, I’ve come to understand the concept of an accredited investor. In order for an individual to be an accredited investor, they must either have an annual income of $200k (or $300k if married) for the last 2 years and have a reasonable expectation for it to continue into the future or they must have a net worth of $1 million that does not include their primary residence.
For a school/non-profit to become an accredited investor, it must have at least $5 million in assets. As an accredited investor, you gain access to high-quality investments with the potential for a much higher return. This is how larger endowments and trusts grow their wealth faster. This is where the thought for starting Fortify Foundation came about. As small-to-medium-sized schools come together to pool resources into a large pot, then we are able to invest in alternative investments that offer a much higher return than the stock market. In talking with several people associated with Christian schools about investing money, the common consensus is that it would not be wise to invest God’s money because of the potential loss that could ensue. This is where I believe there tends to be some misguided thinking.
A great illustration comes from Jesus’ own words in His teaching us the Parable of the Talents in Matthew 25:14-30. A common parable to many of us but let’s take some deep consideration into what is actually taking place. The master gave three of his servants’ different numbers of “talents” to manage (v14-15). The first servant received 5 talents, the second servant received 2 talents, and the third servant only received 1 talent. Most people don’t realize that this was not a small amount of money. A talent was commensurate with 20 years annual pay for a laborer during that time. If we were to equate that to our current day and age, this would be approximately $1 million for each talent. So, the first servant received $5 million, the second servant received $2 million, and the third servant received $1 million. This was a significant amount of money that the master had entrusted to them.
The passage does not describe the exact length of time that these servants had to manage this money, but it does say “After a long time…” (v.19) – this could’ve been a few months or even a few years but that is not the point of this passage. Servants one and two invested their money and doubled their master’s money and the third servant did nothing with it because he was afraid to lose his master’s money. The third was so risk-averse that he dug a hole in the ground and hid the money. In the end, the master praised the two servants that doubled his money saying in v21, “…well done, thou good and faithful servant: thou hast been faithful over a few things, I will make thee ruler over many things.” On the contrary, the master was extremely disappointed with how the third servant just stuck his money in the ground. He stated to the third servant in v26-30: “…thou wicked and slothful servant…; cast the unprofitable servant into outer darkness: there shall be weeping and gnashing of teeth.” I don’t know about you, but this seems very extreme for the master to cast out his servant the way he did. This parable I believe demonstrates to us the amount of disdain the Lord has for his people that don’t invest his money and give it the opportunity to grow. Do we truly believe that He owns the cattle on a thousand hills (Psa. 50:10)? If we believe that He does, then we will invest His money wisely!
Obviously, we want to create investing standards so that we are not foolishly investing His money. However, just having His money sit in a bank account earning little to no return is just like the third servant that stuck it in the ground. In expectation of God’s blessings, we need to consider how we invest the blessing that He does give us whether great or small. Starting your own endowment through Fortify will allow you to have a place to invest His money through the wise investment policies that we have put into place. This will also allow you to grow His money to allow your school to grow in perpetuity. Raising tuition can seem like a stressful thing, especially when you know it will have an impact on some families’ ability to pay in full. This is where you can start a scholarship endowment to help offset those costs for some of your families.
Let’s look at Pareto’s 80/20 principle. When raising tuition, about 80% of your families will be able to absorb the increase in tuition without any major issues and about 20% may struggle. This is where you would use your scholarship endowment to help the 20% that truly need assistance.
At the end of the day, Fortify Foundation is here to assist Christian, private schools across the country and to strengthen and protect Christian education forever. This will in turn allow us to continue to further the cause of Christ until He returns. Be sure to reach out to us if you are interested in learning more about starting an endowment for your school.